Date of coming into effect of the Insolvency and Bankruptcy Code is irrelevant to the triggering of any limitation period for applications under the Code: SC
The Supreme Court ruled that the date on which the Insolvency and Bankruptcy Code (“Code”) came into force is wholly irrelevant to the triggering of any limitation period for applications under the Code. The Apex Court held that since “applications” are petitions which are filed under the Code, Article 137 of the Limitation Act, 1963 shall apply to such applications.A bench of Justices...
The Supreme Court ruled that the date on which the Insolvency and Bankruptcy Code (“Code”) came into force is wholly irrelevant to the triggering of any limitation period for applications under the Code. The Apex Court held that since “applications” are petitions which are filed under the Code, Article 137 of the Limitation Act, 1963 shall apply to such applications.
A bench of Justices R. F. Nariman and V. Ramasubramanian held that for applications that are filed under Section 7 of the Code, Article 137 of the Limitation Act, 1963 shall apply. The Court reiterated that an application under Section 7 of the Code does not purport to be an application to enforce any mortgage liability. It is an application made by a financial creditor stating that a default, as defined under the Code, has been made, which default amounts to Rs.1 lakh or more which then triggers the application of the Code on settled principles that have been laid down by several judgments of this Court.
The Court further pointed out that considering that there was a deed of mortgage which was executed between the parties in this case, an application under Section 7 of the Code does not purport to be an application to enforce any mortgage liability.